KUALA LUMPUR - Companies mandated to furnish environmental, social and governance (ESG) reporting standards must refrain from greenwashing practices or providing misleading information, as false claims will do more harm to their reputation than any potential benefit in terms of cost-savings.
STACS ESGpedia founder and managing director Benjamin Soh said any company, including small and medium enterprises (SMEs), should not take any risk by resorting to greenwashing as the backlash could severely affect relationships with clients and thereafter revenue.
"Such unhealthy practices of covering up claims of sustainable measures with misleading information would eventually catch up (with the company), leading to a huge loss in brand and reputation,” he told Bernama in an interview recently.
Greenwashing or eco-washing is defined as the sharing of misleading information by organisations and companies to appear environmentally responsible. It can also be the practice of making brands appear more sustainable than they really are.
Soh said a company resorts to greenwashing advertisement mostly for monetary gains, as well as for marketing or branding purposes.
Locally, Soh believes Malaysian companies that have embarked on the ESG journey, will not take the risk of greenwashing as the backlash could be severe.
"Other than regulations, the market will step in and react. Investors and consumers will penalise companies that are greenwashing,” he added.
He said STACS ESGpedia, as Asia’s leading ESG data and technology solutions company, is ready to help local SMEs and other companies adopt both international and country-specific ESG reporting standards via digital tools.
On ways to counter greenwashing, he said authorities should provide standardised guidelines for companies to prevent them from manipulating and practising "eco-spins” in the business world.
The guidelines could also prevent companies fabricating data to take advantage of the tax reduction offered by the government.
Previously, it was reported that the government allows tax reductions up to RM50,000 per year for a company’s expenditure related to ESG activities, available from this year till 2027.
ESG activities include improvement on the sustainability framework, managing climate risks, conducting scenario analysis and complying with any other ESG-related reporting requirements. - BERNAMA